The Real Estate Encyclopedia
Evolution of the Spanish housing sector
Category - Global Real Estate - Europe Real Estate

From 1997 to 2007 the Spanish housing sector experienced a period of expansion because of social, demographic and financial reasons, in addition to speculation.  The fiscal and urban policies additionally favored this real estate boom.  Residential construction grew in a sustained manner until doubling itís weight relative to the GDP, representing 4.7% in 1997 and growing to 9.2% in 2007. Never before had so much land been urbanized and so many apartments built in Spain.

In this expanding market the private housing transactions surpassed 900.000 in 2006. Household mortages for buying housing multiplied 6 times in 10 years, going from 100 million euros in 1997 to 600 million euros in 2007.

The free fall started to be visible in 2007. In less than 3 years, housing transactions fell from 908.000 registered in 2006 to 460.000 registered in 2009.  However, in spite of this change the tendency of the demand, in 2007 and 2008 about 600.000 houses were built annually, a figure much higher than the actual final transactions.

In 2008 the housing bubble burst because of problems of credit access caused by the worldwide financial crisis. People no longer bought apartments and the construction of new apartments went from 665.000 private apartments started in 2006 to 269.000 in 2008. During 2009 only 80.320 apartments were begun.

However, in spite of the decline in the construction of apartments, the stock of new apartments that havenít sold is shocking. At the end of 2009 it was about 700.000 apartments.


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